Don’t risk retirement on kids’ college

As a parent, you’re used to making sacrifices for your child, so it seems natural to put aside your retirement needs and focus on their college fund. In one survey from T. Rowe Price, 52 percent of parents said saving for their kids’ college trumped saving for retirement.

But that’s a really, really bad idea. Here’s why:

Retirement is guaranteed, college isn’t: You have an almost 100 percent chance of retiring someday, but the same can’t be said about your kid going to college. The latest findings from the National Center for Education Statistics show that only 65.9 percent of students enrolled in college in the fall after their high school graduation. And not all of those kids will get their degrees.

But you will retire someday — and you need to be prepared. In fact, you’ll probably retire earlier than you expected. According to the Employee Benefit Research Institute, in recent years, about half of retirees left work earlier than they’d planned. That fact is reason enough to put your retirement investing into high gear.

Two words — scholarships and grants: Your kids can apply for scholarships and grants to pay for college. You can’t apply for those to fund your retirement.

Each year, the U.S. Department of Education gives out about $46 billion in grants and scholarships, according to Debt.org. On top of that, individuals, companies, foundations and other groups award roughly $3.3 billion. If your kids do the work of searching and applying for scholarships, they’re likely to find at least some tuition money.

Time is investing’s best friend: If you wait to focus on your retirement account until you’ve fully funded your kids’ college savings, you’ll miss out on the power of compound interest — and thousands of dollars.

Let’s say you have two children by the time you turn 30. You decide to focus the bulk of your savings on the kids’ college fund, so you put away money for them instead of your retirement. Then in your 40s, you begin to focus on retirement. You put away $375 a month from ages 40-65 and accumulate almost $500,000. Sounds good, right? That is, until you calculate how much you would have had if you had started saving that much in your 30s instead.

At age 65, your retirement fund would have topped $1.3 million. That 10-year delay in investing penalized you $500,000.

Your retirement years could be expensive: A recent estimate from Fidelity suggests a retired couple can expect to spend $245,000 on health care from ages 65-85. That’s because as you age, you’re more likely to have health problems.

Keep in mind, though, that this amount doesn’t include dental care, over-the-counter medications and long-term care. HealthView Services estimates that when you consider additional health-related expenses — including vision, hearing, dental and co-pays — the total amount a couple can expect to pay could reach $395,000. That breaks down to more than $1,600 a month.

You don’t want to be a burden to your kids later: I’ve actually had clients tell me their retirement plan was to mooch off their kids. “I took care of them for 20-plus years, so it’s their turn to take care of me!” Really? Is that how you want your children and grandchildren to remember that chapter in your life? And what if, God forbid, they couldn’t help you?